[Federal Register Volume 72, Number 72 (Monday, April 16, 2007)]
[Rules and Regulations]
[Pages 18869-18880]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-6699]


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DEPARTMENT OF COMMERCE

Office of the Secretary

15 CFR Parts 19, 21 and 22

[Docket Number: 070216039-7040-01]
RIN: 0605-AA24


Commerce Debt Collection

AGENCY: Office of the Chief Financial Officer and Assistant Secretary 
for Administration, Department of Commerce.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule revises the Department of Commerce (Commerce 
Department or Commerce) debt collection regulations to conform to the 
Debt Collection Improvement Act of 1996, the revised Federal Claims 
Collection Standards, and other laws applicable to the collection of 
non-tax debts owed to the Commerce Department. This rule also revises 
Commerce's regulations governing the offset of Commerce-issued payments 
to collect debts owed to other Federal agencies.

DATES: This rule is effective May 16, 2007; comments must be received 
on or before May 16, 2007.

ADDRESSES: Send comments to the Deputy Chief Financial Officer, Office 
of Financial Management, Department of Commerce, 1401 Constitution 
Avenue, NW., Room 6827, Washington, DC 20230. Comments also may be 
submitted by electronic mail to <a href="/cdn-cgi/l/email-protection#d9969f9496bfbfb0babc99bdb6baf7beb6af"><span class="__cf_email__" data-cfemail="4c030a01032a2a252f290c28232f622b233a">[email protected]</span></a>.

FOR FURTHER INFORMATION CONTACT: Lisa Casias, Deputy Chief Financial 
Officer and Director for Financial Management, Office of Financial 
Management, at (202) 482-1207, Department of Commerce, 1401 
Constitution Avenue, NW., Room 6827, Washington, DC 20230. This 
document is available for downloading from the Department of Commerce, 
Office of Financial Management's Web site at the following address: 
http://osec.doc.gov/ofm/OFM%20Publications.htm.

SUPPLEMENTARY INFORMATION:

Background

    This rule revises and replaces Department of Commerce (Commerce 
Department or Commerce) debt collection regulations found at 15 CFR 
Parts 19, 21 and 22 to conform to the Debt Collection Improvement Act 
of 1996 (DCIA), Public Law 104-134, 110 Stat. 1321, 1358 (Apr. 26, 
1996), the revised Federal Claims Collection Standards, 31 CFR Chapter 
IX (Parts 900 through 904), and other laws applicable to the collection 
of non-tax debt owed to the Government.
    This regulation provides procedures for the collection of non-tax 
debts owed to Commerce Department entities. Commerce adopts the 
Government-wide debt collection standards promulgated by the 
Departments of the Treasury and Justice, known as the Federal Claims 
Collection Standards (FCCS), as revised on November 22, 2000 (65 FR 
70390), and supplements the FCCS by prescribing procedures consistent 
with the FCCS, as necessary and appropriate for Commerce operations. 
This regulation also provides the procedures for the collection of 
debts owed to other Federal agencies when a request for offset is 
received by Commerce.
    This regulation does not apply to the collection of tax debts, 
which is governed by the Internal Revenue Code of 1986 (26 U.S.C. 1 et 
seq.) and regulations, policies and procedures issued by the Internal 
Revenue Service.
    This regulation does not contain a section regarding the delegation 
of debt collection authority within the Commerce Department. The 
delegation is contained in the Department of Commerce Credit and Debt 
Management Operating Procedures Handbook (currently available at http://www.osec.doc.gov/ofm/credit/cover.htm), and does not need to be 
included in the revised regulation.
    Nothing in this regulation precludes the use of collection remedies 
not contained in this regulation. For example, Commerce entities may 
collect unused travel advances through setoff of an employee's pay 
under 5 U.S.C. 5705. Commerce entities and other Federal agencies may 
simultaneously use multiple collection remedies to collect a debt, 
except as prohibited by law.
    Commerce entities may, but are not required to, promulgate 
additional policies and procedures consistent with this regulation, the 
FCCS, and other applicable Federal laws, policies, and procedures, 
subject to the approval of the Deputy Chief Financial Officer.

Section Analysis

Subpart A--Sections 19.1 Through 19.3

    Subpart A of this regulation addresses the general provisions 
applicable to the collection of non-tax debts owed to Commerce, 
including to offices and bureaus (collectively referred to as Commerce 
entities). Commerce offices currently include the Office of the 
Secretary of Commerce, and the Office of Inspector General. Commerce 
bureaus currently include the Bureau of Industry and Security, the 
Economics and Statistics Administration (including the Bureau of 
Economic Analysis, and the Bureau of the Census), the Economic 
Development Administration, the International Trade Administration, the 
Minority Business Development Agency, the National Oceanic and 
Atmospheric Administration, the National Telecommunications and 
Information Administration, the U.S. Patent and Trademark Office, and 
the Technology Administration (including the National Institute of 
Standards and Technology, and the National Technical Information 
Service).

[[Page 18870]]

    As stated in Section 19.2 of this interim final rule, nothing in 
this regulation requires a Commerce entity to duplicate notices or 
administrative proceedings required by contract, this regulation or 
other laws or regulations, including but not limited to financial 
assistance awards or related regulations (including those relating to 
grants, cooperative agreements, loans or loan guarantees). Thus, for 
example, a Commerce entity is not required to provide a debtor with two 
hearings on the same issue merely because the entity uses two different 
collection tools, each of which requires that the debtor be provided 
with a hearing.

Subpart B--Sections 19.4 Through 19.19

    Subpart B of this regulation describes the procedures to be 
followed by Commerce entities when collecting debts owed to the 
Commerce Department. Among other things, subpart B outlines the due 
process procedures Commerce entities are required to follow when using 
offset (administrative, tax refund and salary) to collect a Commerce 
debt, when garnishing a debtor's wages, or before reporting a Commerce 
debt to a credit bureau. Specifically, Commerce entities are required 
to provide debtors with notice of the amount and type of Commerce debt, 
the intended collection action to be taken, how a debtor may pay the 
Commerce debt or make alternate repayment arrangements, how a debtor 
may review documents related to the Commerce debt, how a debtor may 
dispute the Commerce debt, and the consequences to the debtor if the 
Commerce debt is not paid. This regulation does not require Commerce 
entities to send notices by certified mail. The Commerce Department has 
determined that the certified mail requirement imposes an unnecessary 
administrative burden and expense. Notices may be sent by first-class 
mail, and if not returned by the United States Postal Service, Commerce 
entities may presume that the notice was received. See Rosenthal v. 
Walker, 111 U.S. 185 (1884); Mahon v. Credit Bureau of Placer County 
Incorporated, 171 F.3d 1197 (9th Cir. 1999). Nothing in these 
regulations precludes the use of other forms of delivery of notice 
which are either required by statute or contract or are intended to 
effect prompt delivery of the notice under appropriate circumstances, 
including the use of certified mail, express mail or hand delivery.
    Subpart B also explains the circumstances under which Commerce 
entities may waive interest, penalties and administrative costs.
    This regulation updates Commerce Department procedures to reflect 
changes required by the DCIA. For example, the DCIA centralized the use 
of offset by requiring agencies to refer debts delinquent more than 180 
days to the Financial Management Service for offset. See 31 U.S.C. 
3716(c)(6). The Financial Management Service disburses millions of 
Federal payments annually and is required to offset payments to persons 
who owe delinquent debts to the Government. Prior to the DCIA, agencies 
were required to contact the particular agency issuing a payment in 
order to initiate the offset of a Federal payment. This regulation also 
incorporates procedures for several collection remedies authorized by 
the DCIA, such as administrative wage garnishment and barring 
delinquent debtors from obtaining additional Federal loan assistance.
    This regulation does not specify the dollar threshold for which 
legal approval of compromises or suspension or termination of debt 
collection activity is required. This information is contained in the 
Department of Commerce Credit and Debt Management Operating Procedures 
Handbook (currently located at http://www.osec.doc.gov/ofm/credit/cover.htm).

Subpart C--Sections 19.20 and 19.21

    Subpart C of this regulation describes the procedures to be 
followed when a Federal agency, other than a Commerce entity, would 
like to use the offset process to collect a debt from a non-tax payment 
issued by the Commerce Department as a payment agency. This is 
distinguished from the offset of payments disbursed by the Treasury 
Department's Financial Management Service in its capacity as disbursing 
agency for the Federal Government. The offset of payments disbursed by 
the Financial Management Service, including tax refund payments issued 
by the Internal Revenue Service and social security benefit payments 
issued by the Social Security Administration, is conducted through the 
Treasury Offset Program and is governed by regulations found at 31 CFR 
part 285, as well as agency-specific regulations. Subpart C of this 
regulation governs the process for offsets that occur on an ad hoc, 
case-by-case basis to collect debts from payments made by the Commerce 
Department to its employees, its vendors, its financial assistance 
award recipients (including recipients of grants, cooperative 
agreements, loans or loan guarantees), and others to whom the Commerce 
Department is required or authorized to pay. While centralized offset 
through the Treasury Offset Program is the Government's primary offset 
collection tool, this regulation provides the procedures to be used 
when centralized offset is otherwise not available or appropriate. An 
agency's use of the non-centralized administrative offset process shall 
not provide grounds to invalidate any offset on the basis that 
centralized offset was not used.

Regulatory Analysis

E.O. 12866, Regulatory Review

    This rule is not a significant regulatory action as defined in 
Executive Order 12866.

Administrative Procedure Act

    The Commerce Department is promulgating this interim final rule 
without prior notice and opportunity for public comment pursuant to the 
Administrative Procedure Act, 5 U.S.C. 553 (APA) because this rule is 
exempt under 5 U.S.C. 553(a)(2). This regulation provides procedures 
for the collection of non-tax debts owed to Commerce Department 
entities. Commerce adopts the Government-wide debt collection standards 
promulgated by the Departments of the Treasury and Justice, known as 
the Federal Claims Collection Standards (FCCS), as revised on November 
22, 2000 (65 FR 70390), and supplements the FCCS by prescribing 
procedures consistent with the FCCS, as necessary and appropriate for 
Commerce operations. This regulation also provides the procedures for 
the collection of debts owed to other Federal agencies when a request 
for offset is received by Commerce. Although prior notice of this 
rulemaking and opportunity for public comment are not required under 
the APA (see 5 U.S.C. 553(b)), the public is invited to submit comments 
on the interim final rule.

Regulatory Flexibility Act

    Because notice of proposed rulemaking and opportunity for comment 
are not required pursuant to 5 U.S.C. 553, or any other law, the 
analytical requirements of the Regulatory Flexibility act (5 U.S.C. 
601, et seq.) are inapplicable. Therefore, a regulatory flexibility 
analysis is not required and has not been prepared.

List of Subjects in 15 CFR Part 19

    Administrative practice and procedure, Claims, Debts, Garnishment 
of wages, Government employee, Hearing and appeal procedures, Pay 
administration, Salaries, Wages.

[[Page 18871]]

Authority and Issuance

    For the reasons set forth in the preamble, and under the authority 
of 31 U.S.C. 3701, et seq., the Commerce Department amends 15 CFR 
subtitle A as follows:

0
1. Part 19 is revised to read as follows:

PART 19--COMMERCE DEBT COLLECTION

Subpart A--General Provisions
Sec.
19.1 What definitions apply to the regulations in this Part?
19.2 Why has the Commerce Department issuing these regulations and 
what do they cover?
19.3 Do these regulations adopt the Federal Claims Collection 
Standards (FCCS)?
Subpart B--Procedures to Collect Commerce Debts
19.4 What notice will Commerce entities send to a debtor when 
collecting a Commerce debt?
19.5 How will Commerce entities add interest, penalty charges, and 
administrative costs to a Commerce debt?
19.6 When will Commerce entities allow a debtor to pay a Commerce 
debt in installments instead of one lump sum?
19.7 When will Commerce entities compromise a Commerce debt?
19.8 When will Commerce entities suspend or terminate debt 
collection on a Commerce debt?
19.9 When will Commerce entities transfer a Commerce debt to the 
Treasury Department's Financial Management Service for collection?
19.10 How will Commerce entities use administrative offset (offset 
of non-tax Federal payments) to collect a Commerce debt?
19.11 How will Commerce entities use tax refund offset to collect a 
Commerce debt?
19.12 How will Commerce entities offset a Federal employee's salary 
to collect a Commerce debt?
19.13 How will Commerce entities use administrative wage garnishment 
to collect a Commerce debt from a debtor's wages?
19.14 How will Commerce entities report Commerce debts to credit 
bureaus?
19.15 How will Commerce entities refer Commerce debts to private 
collection agencies?
19.16 When will Commerce entities refer Commerce debts to the 
Department of Justice?
19.17 Will a debtor who owes a Commerce or other Federal agency 
debt, and persons controlled by or controlling such debtors, be 
ineligible for Federal loan assistance, grants, cooperative 
agreements, or other sources of Federal funds or for Federal 
licenses, permits or privileges?
19.18 How does a debtor request a special review based on a change 
in circumstances such as catastrophic illness, divorce, death, or 
disability?
19.19 Will Commerce entities issue a refund if money is erroneously 
collected on a Commerce debt?
Subpart C--Procedures for Offset of Commerce Department Payments to 
Collect Debts Owed to Other Federal Agencies
19.20 How do other Federal agencies use the offset process to 
collect debts from payments issued by a Commerce entity?
19.21 What does a Commerce entity do upon receipt of a request to 
offset the salary of a Commerce entity employee to collect a debt 
owed by the employee to another Federal agency?

    Authority: 31 U.S.C. 3701, et seq.

Subpart A--General Provisions


Sec.  19.1  What definitions apply to the regulations in this Part?

    As used in this Part:
    Administrative offset or offset means withholding funds payable by 
the United States (including funds payable by the United States on 
behalf of a state government) to, or held by the United States for, a 
person to satisfy a debt owed by the person. The term ``administrative 
offset'' can include, but is not limited to, the offset of Federal 
salary, vendor, retirement, and Social Security benefit payments. The 
terms ``centralized administrative offset'' and ``centralized offset'' 
refer to the process by which the Treasury Department's Financial 
Management Service offsets Federal payments through the Treasury Offset 
Program.
    Administrative wage garnishment means the process by which a 
Federal agency orders a non-Federal employer to withhold amounts from a 
debtor's wages to satisfy a debt, as authorized by 31 U.S.C. 3720D, 31 
CFR 285.11, and this Part.
    Agency or Federal agency means a department, agency, court, court 
administrative office, or instrumentality in the executive, judicial, 
or legislative branch of the Federal Government, including government 
corporations.
    Commerce debt means a debt owed to a Commerce entity by a person.
    Commerce Department means the United States Department of Commerce.
    Commerce entity means a component of the Commerce Department, 
including offices or bureaus. Commerce offices currently include the 
Office of the Secretary of Commerce, and the Office of Inspector 
General. Commerce bureaus currently include the Bureau of Industry and 
Security, the Economics and Statistics Administration (including the 
Bureau of Economic Analysis, and the Bureau of the Census), the 
Economic Development Administration, the International Trade 
Administration, the Minority Business Development Agency, the National 
Oceanic and Atmospheric Administration, the National Telecommunications 
and Information Administration, the U.S. Patent and Trademark Office, 
and the Technology Administration (including the National Institute of 
Standards and Technology, and the National Technical Information 
Service).
    Creditor agency means any Federal agency that is owed a debt.
    Day means calendar day except when express reference is made to 
business day, which reference shall mean Monday through Friday. For 
purposes of time computation, the last day of the period provided will 
be included in the calculation unless that day is a Saturday, a Sunday, 
or a Federal legal holiday; in which case, the next business day will 
be included.
    Debt means any amount of money, funds or property that has been 
determined by an appropriate official of the Federal Government to be 
owed to the United States by a person. As used in this Part, the term 
``debt'' can include a Commerce debt but does not include debts arising 
under the Internal Revenue Code of 1986 (26 U.S.C. 1 et seq.).
    Debtor means a person who owes a debt to the United States.
    Delinquent debt means a debt that has not been paid by the date 
specified in the agency's initial written demand for payment or 
applicable agreement or instrument (including a post-delinquency 
payment agreement) unless other satisfactory payment arrangements have 
been made.
    Delinquent Commerce debt means a delinquent debt owed to a Commerce 
entity.
    Disposable pay has the same meaning as that term is defined in 5 
CFR 550.1103.
    Employee or Federal employee means a current employee of the 
Commerce Department or other Federal agency, including a current member 
of the uniformed services, including the Army, Navy, Air Force, Marine 
Corps, Coast Guard, Commissioned Corps of the National Oceanic and 
Atmospheric Administration, and Commissioned Corps of the Public Health 
Service, including the National Guard and the reserve forces of the 
uniformed services.
    FCCS means the Federal Claims Collection Standards, which were 
jointly published by the Departments of the Treasury and Justice and 
codified at 31 CFR Parts 900-904.
    Financial Management Service means the Financial Management 
Service, a bureau of the Treasury Department, which is responsible for 
the centralized collection of delinquent debts through

[[Page 18872]]

the offset of Federal payments and other means.
    Payment agency or Federal payment agency means any Federal agency 
that transmits payment requests in the form of certified payment 
vouchers, or other similar forms, to a disbursing official for 
disbursement. The payment agency may be the agency that employs the 
debtor. In some cases, the Commerce Department may be both the creditor 
agency and payment agency.
    Person means an individual, corporation, partnership, association, 
organization, State or local government or any other type of entity 
other than a Federal agency.
    Salary offset means a type of administrative offset to collect a 
debt under 5 CFR 5514 by deductions(s) at one or more officially 
established pay intervals from the current pay account of an employee 
without his or her consent.
    Secretary means the Secretary of Commerce.
    Tax refund offset is defined in 31 CFR 285.2(a).


Sec.  19.2  Why has the Commerce Department issuing these regulations 
and what do they cover?

    (a) Scope. This Part provides procedures for the collection of 
Commerce debts. This Part also provides procedures for collection of 
other debts owed to the United States when a request for offset of a 
payment for which Commerce is the payment agency is received by the 
Commerce Department from another agency (for example, when a Commerce 
Department employee owes a debt to the United States Department of 
Education).
    (b) Applicability. (1) This Part applies to the Commerce Department 
when collecting a Commerce debt, to persons who owe Commerce debts, to 
persons controlled by or controlling persons who owe Federal agency 
debts, and to Federal agencies requesting offset of a payment issued by 
the Commerce Department as a payment agency (including salary payments 
to Commerce Department employees).
    (2) This Part does not apply to tax debts nor to any debt for which 
there is an indication of fraud or misrepresentation, as described in 
Sec.  900.3 of the FCCS, unless the debt is returned by the Department 
of Justice to the Commerce Department for handling.
    (3) Nothing in this Part precludes collection or disposition of any 
debt under statutes and regulations other than those described in this 
Part. See, for example, 5 U.S.C. 5705, Advancements and Deductions, 
which authorizes Commerce entities to recover travel advances by offset 
of up to 100% of a Federal employee's accrued pay. See, also, 5 U.S.C. 
4108, governing the collection of training expenses. To the extent that 
the provisions of laws, other regulations, and Commerce Department 
enforcement policies differ from the provisions of this Part, those 
provisions of law, other regulations, and Commerce Department 
enforcement policies apply to the remission or mitigation of fines, 
penalties, and forfeitures, and to debts arising under the tariff laws 
of the United States, rather than the provisions of this Part.
    (c) Additional policies and procedures. Commerce entities may, but 
are not required to, promulgate additional policies and procedures 
consistent with this Part, the FCCS, and other applicable Federal law, 
policies, and procedures, subject to the approval of Deputy Chief 
Financial Officer.
    (d) Duplication not required. Nothing in this Part requires a 
Commerce entity to duplicate notices or administrative proceedings 
required by contract, this Part, or other laws or regulations, 
including but not limited to those required by financial assistance 
awards such as grants, cooperative agreements, loans or loan 
guarantees.
    (e) Use of multiple collection remedies allowed. Commerce entities 
and other Federal agencies may simultaneously use multiple collection 
remedies to collect a debt, except as prohibited by law. This Part is 
intended to promote aggressive debt collection, using for each debt all 
available and appropriate collection remedies. These remedies are not 
listed in any prescribed order to provide Commerce entities with 
flexibility in determining which remedies will be most efficient in 
collecting the particular debt.
    (f) All citations in this Part, such as to statutes, regulations 
and the Department of Commerce Credit and Debt Management Operating 
Procedures Handbook, are intended to be references to cited sources as 
each currently stands and as each may be amended from time to time.


Sec.  19.3  Do these regulations adopt the Federal Claims Collection 
Standards (FCCS)?

    This Part adopts and incorporates all provisions of the FCCS. This 
Part also supplements the FCCS by prescribing procedures consistent 
with the FCCS, as necessary and appropriate for Commerce Department 
operations.

Subpart B--Procedures to Collect Commerce Debts


Sec.  19.4  What notice will Commerce entities send to a debtor when 
collecting a Commerce debt?

    (a) Notice requirements. Commerce entities shall aggressively 
collect Commerce debts. Commerce entities shall promptly send at least 
one written notice to a debtor informing the debtor of the consequences 
of failing to pay or otherwise resolve a Commerce debt. The notice(s) 
shall be sent to the debtor at the most current address of the debtor 
in the records of the Commerce entity collecting the Commerce debt. 
Generally, before starting the collection actions described in 
Sec. Sec.  19.5 and 19.9 through 19.17 of this Part, Commerce entities 
will send no more than two written notices to the debtor. The notice(s) 
explain why the Commerce debt is owed, the amount of the Commerce debt, 
how a debtor may pay the Commerce debt or make alternate repayment 
arrangements, how a debtor may review non-privileged documents related 
to the Commerce debt, how a debtor may dispute the Commerce debt, the 
collection remedies available to Commerce entities if the debtor 
refuses or otherwise fails to pay the Commerce debt, and other 
consequences to the debtor if the Commerce debt is not paid. Except as 
otherwise provided in paragraph (b) of this section, the written 
notice(s) shall explain to the debtor:
    (1) The nature and amount of the Commerce debt, and the facts 
giving rise to the Commerce debt;
    (2) How interest, penalties, and administrative costs are added to 
the Commerce debt, the date by which payment should be made to avoid 
such charges, and that such assessments must be made unless excused in 
accordance with 31 CFR 901.9 (see Sec.  19.5 of this Part);
    (3) The date by which payment should be made to avoid the enforced 
collection actions described in paragraph (a)(6) of this section;
    (4) The Commerce entity's willingness to discuss alternative 
payment arrangements and how the debtor may enter into a written 
agreement to repay the Commerce debt under terms acceptable to the 
Commerce entity (see Sec.  19.6 of this Part);
    (5) The name, address, and telephone number of a contact person or 
office within the Commerce entity;
    (6) The Commerce entity's intention to enforce collection by taking 
one or more of the following actions if the debtor fails to pay or 
otherwise resolve the Commerce debt:

[[Page 18873]]

    (i) Offset. Offset the debtor's Federal payments, including income 
tax refunds, salary, certain benefit payments (such as Social 
Security), retirement, vendor, travel reimbursements and advances, and 
other Federal payments (see Sec. Sec.  19.10 through 19.12 of this 
Part);
    (ii) Private collection agency. Refer the Commerce debt to a 
private collection agency (see Sec.  19.15 of this Part);
    (iii) Credit bureau reporting. Report the Commerce debt to a credit 
bureau (see Sec.  19.14 of this Part);
    (iv) Administrative wage garnishment. Garnish the individual 
debtor's wages through administrative wage garnishment (see Sec.  19.13 
of this Part);
    (v) Litigation. Refer the Commerce debt to the Department of 
Justice to initiate litigation to collect the Commerce debt (see Sec.  
19.16 of this Part);
    (vi) Treasury Department's Financial Management Service. Refer the 
Commerce debt to the Financial Management Service for collection (see 
Sec.  19.9 of this Part);
    (7) That Commerce debts over 180 days delinquent must be referred 
to the Financial Management Service for the collection actions 
described in paragraph (a)(6) of this section (see Sec.  19.9 of this 
Part);
    (8) How the debtor may inspect and copy non-privileged records 
related to the Commerce debt;
    (9) How the debtor may request a review of the Commerce entity's 
determination that the debtor owes a Commerce debt and present evidence 
that the Commerce debt is not delinquent or legally enforceable (see 
Sec. Sec.  19.10(c) and 19.11(c) of this Part);
    (10) How a debtor who is an individual may request a hearing if the 
Commerce entity intends to garnish the debtor's private sector (i.e., 
non-Federal) wages (see Sec.  19.13(a) of this Part), including:
    (i) The method and time period for requesting a hearing;
    (ii) That a request for a hearing, timely filed on or before the 
15th business day following the date of the mailing of the notice, will 
stay the commencement of administrative wage garnishment, but not other 
collection procedures; and
    (iii) The name and address of the office to which the request for a 
hearing should be sent.
    (11) How a debtor who is an individual and a Federal employee 
subject to Federal salary offset may request a hearing (see Sec.  
19.12(e) of this Part), including:
    (i) The method and time period for requesting a hearing;
    (ii) That a request for a hearing, timely filed on or before the 
15th day following receipt of the notice, will stay the commencement of 
salary offset, but not other collection procedures;
    (iii) The name and address of the office to which the request for a 
hearing should be sent;
    (iv) That the Commerce entity will refer the Commerce debt to the 
debtor's employing agency or to the Financial Management Service to 
implement salary offset, unless the employee files a timely request for 
a hearing;
    (v) That a final decision on the hearing, if requested, will be 
issued at the earliest practical date, but not later than 60 days after 
the filing of the request for a hearing, unless the employee requests 
and the hearing official grants a delay in the proceedings;
    (vi) That any knowingly false or frivolous statements, 
representations, or evidence may subject the Federal employee to 
penalties under the False Claims Act (31 U.S.C. 3729-3731) or other 
applicable statutory authority, and criminal penalties under 18 U.S.C. 
286, 287, 1001, and 1002, or other applicable statutory authority;
    (vii) That unless prohibited by contract or statute, amounts paid 
on or deducted for the Commerce debt which are later waived or found 
not owed to the United States will be promptly refunded to the 
employee; and
    (viii) That proceedings with respect to such Commerce debt are 
governed by 5 U.S.C. 5514 and 31 U.S.C. 3716.
    (12) How the debtor may request a waiver of the Commerce debt, if 
applicable. See, for example, Sec.  19.5 and Sec.  19.12(f) of this 
Part.
    (13) How the debtor's spouse may claim his or her share of a joint 
income tax refund by filing Form 8379 with the Internal Revenue Service 
(see http://www.irs.gov);
    (14) How the debtor may exercise other rights and remedies, if any, 
available to the debtor under programmatic statutory or regulatory 
authority under which the Commerce debt arose.
    (15) That certain debtors and, if applicable, persons controlled by 
or controlling such debtors, may be ineligible for Federal Government 
loans, guaranties and insurance, grants, cooperative agreements or 
other sources of Federal funds (see 28 U.S.C. 3201(e); 31 U.S.C. 3720B, 
31 CFR 285.13, and Sec.  19.17(a) of this Part);
    (16) If applicable, the Commerce entity's intention to deny, 
suspend or revoke licenses, permits or privileges (see Sec.  19.17(b) 
of this Part); and
    (17) That the debtor should advise the Commerce entity of a 
bankruptcy proceeding of the debtor or another person liable for the 
Commerce debt being collected.
    (b) Exceptions to notice requirements. A Commerce entity may omit 
from a notice to a debtor one or more of the provisions contained in 
paragraphs (a)(6) through (a)(17) of this section if the Commerce 
entity, in consultation with its legal counsel, determines that any 
provision is not legally required given the collection remedies to be 
applied to a particular Commerce debt.
    (c) Respond to debtors; comply with FCCS. Commerce entities should 
respond promptly to communications from debtors and comply with other 
FCCS provisions applicable to the administrative collection of debts. 
See 31 CFR part 901.


Sec.  19.5  How will Commerce entities add interest, penalty charges, 
and administrative costs to a Commerce debt?

    (a) Assessment and notice. Commerce entities shall assess interest, 
penalties and administrative costs on Commerce debts in accordance with 
the provisions of 31 U.S.C. 3717 and 31 CFR 901.9. Interest shall be 
charged in accordance with the requirements of 31 U.S.C. 3717(a). 
Penalties shall accrue at a rate of not more than 6% per year or such 
other higher rate as authorized by law. Administrative costs, that is, 
the costs of processing and handling a delinquent debt, shall be 
determined by the Commerce entity collecting the debt, as directed by 
the Office of the Deputy Chief Financial Officer. Commerce entities may 
have additional policies regarding how interest, penalties, and 
administrative costs are assessed on particular types of debts, subject 
to the approval of the Deputy Chief Financial Officer. Commerce 
entities are required to explain in the notice to the debtor described 
in Sec.  19.4 of this Part how interest, penalties, costs, and other 
charges are assessed, unless the requirements are included in a 
contract or other legally binding agreement.
    (b) Waiver of interest, penalties, and administrative costs. Unless 
otherwise required by law or contract, Commerce entities may not charge 
interest if the amount due on the Commerce debt is paid within 30 days 
after the date from which the interest accrues. See 31 U.S.C. 3717(d). 
Commerce entities may waive interest, penalties, and administrative 
costs, or any portion thereof, when it would be against equity and good 
conscience or not in the United States' best interest to collect such 
charges, in accordance with Commerce guidelines for such waivers. Legal 
counsel approval to waive such charges is required. See Department of 
Commerce Credit and Debt Management

[[Page 18874]]

Operating Standards and Procedures Handbook (currently at http://www.osec.doc.gov/ofm/credit/cover.htm).
    (c) Accrual during suspension of debt collection. In most cases, 
interest, penalties and administrative costs will continue to accrue 
during any period when collection has been suspended for any reason 
(for example, when the debtor has requested a hearing). Commerce 
entities may suspend accrual of any or all of these charges when 
accrual would be against equity and good conscience or not in the 
United States' best interest, in accordance with Commerce guidelines 
for such waivers. See Department of Commerce Credit and Debt Management 
Operating Standards and Procedures Handbook (currently at http://www.osec.doc.gov/ofm/credit/cover.htm).


Sec.  19.6  When will Commerce entities allow a debtor to pay a 
Commerce debt in installments instead of one lump sum?

    If a debtor is financially unable to pay the Commerce debt in one 
lump sum, a Commerce entity may accept payment of a Commerce debt in 
regular installments, in accordance with the provisions of 31 CFR 901.8 
and the Commerce entity's policies and procedures.


Sec.  19.7  When will Commerce entities compromise a Commerce debt?

    If a Commerce entity cannot collect the full amount of a Commerce 
debt, the Commerce entity may compromise the Commerce debt in 
accordance with the provisions of 31 CFR part 902 and the Commerce 
entity's policies and procedures. Legal counsel approval to compromise 
a Commerce debt is required as described in Department of Commerce 
Credit and Debt Management Operating Standards and Procedures Handbook 
(currently at http://www.osec.doc.gov/ofm/credit/cover.htm).


Sec.  19.8  When will Commerce entities suspend or terminate debt 
collection on a Commerce debt?

    If, after pursuing all appropriate means of collection, a Commerce 
entity determines that a Commerce debt is uncollectible, the Commerce 
entity may suspend or terminate debt collection activity in accordance 
with the provisions of 31 CFR part 903 and the Commerce entity's 
policies and procedures. Legal counsel approval to suspend or terminate 
collection on a Commerce debt is required as described in Department of 
Commerce Credit and Debt Management Operating Standards and Procedures 
Handbook (currently at http://www.osec.doc.gov/ofm/credit/cover.htm). 
Termination of debt collection activity by a Commerce entity does not 
discharge the indebtedness.


Sec.  19.9  When will Commerce entities transfer a Commerce debt to the 
Treasury Department's Financial Management Service for collection?

    (a) Commerce entities will transfer any Commerce debt that is more 
than 180 days delinquent to the Financial Management Service for debt 
collection services, a process known as ``cross-servicing.'' See 31 
U.S.C. 3711(g) and 31 CFR 285.12. Commerce entities may transfer 
Commerce debts delinquent 180 days or less to the Financial Management 
Service in accordance with the procedures described in 31 CFR 285.12. 
The Financial Management Service takes appropriate action to collect or 
compromise the transferred Commerce debt, or to suspend or terminate 
collection action thereon, in accordance with the statutory and 
regulatory requirements and authorities applicable to the Commerce debt 
and the collection action to be taken. See 31 CFR 285.12(b) and 
285.12(c)(2). Appropriate action can include, but is not limited to, 
contact with the debtor, referral of the Commerce debt to the Treasury 
Offset Program, private collection agencies or the Department of 
Justice, reporting of the Commerce debt to credit bureaus, and 
administrative wage garnishment.
    (b) At least sixty (60) days prior to transferring a Commerce debt 
to the Financial Management Service, Commerce entities will send notice 
to the debtor as required by Sec.  19.4 of this Part. Commerce entities 
will certify to the Financial Management Service, in writing, that the 
Commerce debt is valid, delinquent, legally enforceable, and that there 
are no legal bars to collection. In addition, Commerce entities will 
certify their compliance with all applicable due process and other 
requirements as described in this Part and other Federal laws. See 31 
CFR 285.12(i) regarding the certification requirement.
    (c) As part of its debt collection process, the Financial 
Management Service uses the Treasury Offset Program to collect Commerce 
debts by administrative and tax refund offset. See 31 CFR 285.12(g). 
The Treasury Offset Program is a centralized offset program 
administered by the Financial Management Service to collect delinquent 
debts owed to Federal agencies and states (including past-due child 
support). Under the Treasury Offset Program, before a Federal payment 
is disbursed, the Financial Management Service compares the name and 
taxpayer identification number (TIN) of the payee with the names and 
TINs of debtors that have been submitted by Federal agencies and states 
to the Treasury Offset Program database. If there is a match, the 
Financial Management Service (or, in some cases, another Federal 
disbursing agency) offsets all or a portion of the Federal payment, 
disburses any remaining payment to the payee, and pays the offset 
amount to the creditor agency. Federal payments eligible for offset 
include, but are not limited to, income tax refunds, salary, travel 
advances and reimbursements, retirement and vendor payments, and Social 
Security and other benefit payments.


Sec.  19.10  How will Commerce entities use administrative offset 
(offset of non-tax Federal payments) to collect a Commerce debt?

    (a) Centralized administrative offset through the Treasury Offset 
Program. (1) In most cases, the Financial Management Service uses the 
Treasury Offset Program to collect Commerce debts by the offset of 
Federal payments. See Sec.  19.9(c) of this Part. If not already 
transferred to the Financial Management Service under Sec.  19.9 of 
this Part, Commerce entities will refer Commerce debt over 180 days 
delinquent to the Treasury Offset Program for collection by centralized 
administrative offset. See 31 U.S.C. 3716(c)(6); 31 CFR part 285, 
subpart A; and 31 CFR 901.3(b). Commerce entities may refer to the 
Treasury Offset Program for offset any Commerce debt that has been 
delinquent for 180 days or less.
    (2) At least sixty (60) days prior to referring a Commerce debt to 
the Treasury Offset Program, in accordance with paragraph (a)(1) of 
this section, Commerce entities will send notice to the debtor in 
accordance with the requirements of Sec.  19.4 of this Part. Commerce 
entities will certify to the Financial Management Service, in writing, 
that the Commerce debt is valid, delinquent, legally enforceable, and 
that there are no legal bars to collection by offset. In addition, 
Commerce entities will certify their compliance with the requirements 
described in this Part.
    (b) Non-centralized administrative offset for Commerce debts. (1) 
When centralized administrative offset through the Treasury Offset 
Program is not available or appropriate, Commerce entities may collect 
past-due, legally enforceable Commerce debts through non-centralized 
administrative offset. See 31 CFR 901.3(c). In these cases, Commerce 
entities may offset a payment

[[Page 18875]]

internally or make an offset request directly to a Federal payment 
agency. If the Federal payment agency is another Commerce entity, the 
Commerce entity making the request shall do so through the Deputy Chief 
Financial Officer as described in Sec.  19.20(c) of this Part.
    (2) At least thirty (30) days prior to offsetting a payment 
internally or requesting a Federal payment agency to offset a payment, 
Commerce entities will send notice to the debtor in accordance with the 
requirements of Sec.  19.4 of this Part. When referring a Commerce debt 
for offset under this paragraph (b), Commerce entities making the 
request will certify, in writing, that the Commerce debt is valid, 
delinquent, legally enforceable, and that there are no legal bars to 
collection by offset. In addition, Commerce entities will certify their 
compliance with these regulations concerning administrative offset. See 
31 CFR 901.3(c)(2)(ii).
    (c) Administrative review. The notice described in Sec.  19.4 of 
this Part shall explain to the debtor how to request an administrative 
review of a Commerce entity's determination that the debtor owes a 
Commerce debt and how to present evidence that the Commerce debt is not 
delinquent or legally enforceable. In addition to challenging the 
existence and amount of the Commerce debt, the debtor may seek a review 
of the terms of repayment. In most cases, Commerce entities will 
provide the debtor with a ``paper hearing'' based upon a review of the 
written record, including documentation provided by the debtor. 
Commerce entities shall provide the debtor with a reasonable 
opportunity for an oral hearing when the debtor requests 
reconsideration of the Commerce debt and the Commerce entity determines 
that the question of the indebtedness cannot be resolved by review of 
the documentary evidence, for example, when the validity of the 
Commerce debt turns on an issue of credibility or veracity. Unless 
otherwise required by law, an oral hearing under this section is not 
required to be a formal evidentiary hearing, although Commerce entities 
should carefully document all significant matters discussed at the 
hearing. Commerce entities may suspend collection through 
administrative offset and/or other collection actions pending the 
resolution of a debtor's dispute.
    (d) Procedures for expedited offset. Under the circumstances 
described in 31 CFR 901.3(b)(4)(iii), Commerce entities may effect an 
offset against a payment to be made to the debtor prior to sending a 
notice to the debtor, as described in Sec.  19.4 of this Part, or 
completing the procedures described in paragraph (b)(2) and (c) of this 
section. Commerce entities shall give the debtor notice and an 
opportunity for review as soon as practicable and promptly refund any 
money ultimately found not to have been owed to the Government. Legal 
counsel approval to effect such pre-notice offset is required as 
described in Department of Commerce Credit and Debt Management 
Operating Standards and Procedures Handbook (currently at http://www.osec.doc.gov/ofm/credit/cover.htm).


Sec.  19.11  How will Commerce entities use tax refund offset to 
collect a Commerce debt?

    (a) Tax refund offset. In most cases, the Financial Management 
Service uses the Treasury Offset Program to collect Commerce debts by 
the offset of tax refunds and other Federal payments. See Sec.  19.9(c) 
of this Part. If not already transferred to the Financial Management 
Service under Sec.  19.9 of this Part, Commerce entities will refer to 
the Treasury Offset Program any past-due, legally enforceable Commerce 
debt for collection by tax refund offset. See 26 U.S.C. 6402(d), 31 
U.S.C. 3720A and 31 CFR 285.2.
    (b) Notice. At least sixty (60) days prior to referring a Commerce 
debt to the Treasury Offset Program, Commerce entities will send notice 
to the debtor in accordance with the requirements of Sec.  19.4 of this 
Part. Commerce entities will certify to the Financial Management 
Service's Treasury Offset Program, in writing, that the Commerce debt 
is past due and legally enforceable in the amount submitted and that 
the Commerce entities have made reasonable efforts to obtain payment of 
the Commerce debt as described in 31 CFR 285.2(d). In addition, 
Commerce entities will certify their compliance with all applicable due 
process and other requirements described in this Part and other Federal 
laws. See 31 U.S.C. 3720A(b) and 31 CFR 285.2.
    (c) Administrative review. The notice described in Sec.  19.4 of 
this Part shall provide the debtor with at least 60 days prior to the 
initiation of tax refund offset to request an administrative review as 
described in Sec.  19.10(c) of this Part. Commerce entities may suspend 
collection through tax refund offset and/or other collection actions 
pending the resolution of the debtor's dispute.


Sec.  19.12  How will Commerce entities offset a Federal employee's 
salary to collect a Commerce debt?

    (a) Federal salary offset. (1) Salary offset is used to collect 
debts owed to the United States by Commerce Department and other 
Federal employees. If a Federal employee owes a Commerce debt, Commerce 
entities may offset the employee's Federal salary to collect the 
Commerce debt in the manner described in this section. For information 
on how a Federal agency other than a Commerce entity may collect debt 
from the salary of a Commerce Department employee, see Sec. Sec.  19.20 
and 19.21, subpart C, of this Part.
    (2) Nothing in this Part requires a Commerce entity to collect a 
Commerce debt in accordance with the provisions of this section if 
Federal law allows otherwise. See, for example, 5 U.S.C. 5705 (travel 
advances not used for allowable travel expenses are recoverable from 
the employee or his estate by setoff against accrued pay and other 
means) and 5 U.S.C. 4108 (recovery of training expenses).
    (3) Commerce entities may use the administrative wage garnishment 
procedure described in Sec.  19.13 of this Part to collect a Commerce 
debt from an individual's non-Federal wages.
    (b) Centralized salary offset through the Treasury Offset Program. 
As described in Sec.  19.9(a) of this Part, Commerce entities will 
refer Commerce debts to the Financial Management Service for collection 
by administrative offset, including salary offset, through the Treasury 
Offset Program. When possible, Commerce entities should attempt salary 
offset through the Treasury Offset Program before applying the 
procedures in paragraph (c) of this section. See 5 CFR 550.1108 and 
550.1109.
    (c) Non-centralized salary offset for Commerce debts. When 
centralized salary offset through the Treasury Offset Program is not 
available or appropriate, Commerce entities may collect delinquent 
Commerce debts through non-centralized salary offset. See 5 CFR 
550.1109. In these cases, Commerce entities may offset a payment 
internally or make a request directly to a Federal payment agency to 
offset a salary payment to collect a delinquent Commerce debt owed by a 
Federal employee. If the Federal payment agency is another Commerce 
entity, the Commerce entity making the request shall do so through the 
Deputy Chief Financial Officer as described in Sec.  19.20(c) of this 
Part. At least thirty (30) days prior to offsetting internally or 
requesting a Federal agency to offset a salary payment, Commerce 
entities will send notice to the debtor in accordance with the 
requirements of Sec.  19.4 of this Part. When referring a Commerce debt 
for offset, Commerce entities will certify

[[Page 18876]]

to the payment agency, in writing, that the Commerce debt is valid, 
delinquent and legally enforceable in the amount stated, and there are 
no legal bars to collection by salary offset. In addition, Commerce 
entities will certify that all due process and other prerequisites to 
salary offset have been met. See 5 U.S.C. 5514, 31 U.S.C. 3716(a), and 
this section for a description of the due process and other 
prerequisites for salary offset.
    (d) When prior notice not required. Commerce entities are not 
required to provide prior notice to an employee when the following 
adjustments are made by a Commerce entity to a Commerce employee's pay:
    (1) Any adjustment to pay arising out of any employee's election of 
coverage or a change in coverage under a Federal benefits program 
requiring periodic deductions from pay, if the amount to be recovered 
was accumulated over four pay periods or less;
    (2) A routine intra-agency adjustment of pay that is made to 
correct an overpayment of pay attributable to clerical or 
administrative errors or delays in processing pay documents, if the 
overpayment occurred within the four pay periods preceding the 
adjustment, and, at the time of such adjustment, or as soon thereafter 
as practical, the individual is provided written notice of the nature 
and the amount of the adjustment and point of contact for contesting 
such adjustment; or
    (3) Any adjustment to collect a Commerce debt amounting to $50 or 
less, if, at the time of such adjustment, or as soon thereafter as 
practical, the individual is provided written notice of the nature and 
the amount of the adjustment and a point of contact for contesting such 
adjustment.
    (e) Hearing procedures--(1) Request for a hearing. A Federal 
employee who has received a notice that his or her Commerce debt will 
be collected by means of salary offset may request a hearing concerning 
the existence or amount of the Commerce debt. The Federal employee also 
may request a hearing concerning the amount proposed to be deducted 
from the employee's pay each pay period. The employee must send any 
request for hearing, in writing, to the office designated in the notice 
described in Sec.  19.4. See Sec.  19.4(a)(11). The request must be 
received by the designated office on or before the 15th day following 
the employee's receipt of the notice. The employee must sign the 
request and specify whether an oral or paper hearing is requested. If 
an oral hearing is requested, the employee must explain why the matter 
cannot be resolved by review of the documentary evidence alone. All 
travel expenses incurred by the Federal employee in connection with an 
in-person hearing will be borne by the employee. See 31 CFR 
901.3(a)(7).
    (2) Failure to submit timely request for hearing. If the employee 
fails to submit a request for hearing within the time period described 
in paragraph (e)(1) of this section, the employee will have waived the 
right to a hearing, and salary offset may be initiated. However, 
Commerce entities should accept a late request for hearing if the 
employee can show that the late request was the result of circumstances 
beyond the employee's control or because of a failure to receive actual 
notice of the filing deadline.
    (3) Hearing official. Commerce entities must obtain the services of 
a hearing official who is not under the supervision or control of the 
Secretary. Commerce entities may contact the Deputy Chief Financial 
Officer as described in Sec.  19.20(c) of this Part or an agent of any 
Commerce agency designated in Appendix A to 5 CFR part 581 (List of 
Agents Designated to Accept Legal Process) to request a hearing 
official.
    (4) Notice of hearing. After the employee requests a hearing, the 
designated hearing official shall inform the employee of the form of 
the hearing to be provided. For oral hearings, the notice shall set 
forth the date, time and location of the hearing. For paper hearings, 
the notice shall notify the employee of the date by which he or she 
should submit written arguments to the designated hearing official. The 
hearing official shall give the employee reasonable time to submit 
documentation in support of the employee's position. The hearing 
official shall schedule a new hearing date if requested by both 
parties. The hearing official shall give both parties reasonable notice 
of the time and place of a rescheduled hearing.
    (5) Oral hearing. The hearing official will conduct an oral hearing 
if he or she determines that the matter cannot be resolved by review of 
documentary evidence alone (for example, when an issue of credibility 
or veracity is involved). The hearing need not take the form of an 
evidentiary hearing, but may be conducted in a manner determined by the 
hearing official, including but not limited to:
    (i) Informal conferences with the hearing official, in which the 
employee and agency representative will be given full opportunity to 
present evidence, witnesses and argument;
    (ii) Informal meetings with an interview of the employee by the 
hearing official; or
    (iii) Formal written submissions, with an opportunity for oral 
presentation.
    (6) Paper hearing. If the hearing official determines that an oral 
hearing is not necessary, he or she will make the determination based 
upon a review of the available written record, including any 
documentation submitted by the employee in support of his or her 
position. See 31 CFR 901.3(a)(7).
    (7) Failure to appear or submit documentary evidence. In the 
absence of good cause shown (for example, excused illness), if the 
employee fails to appear at an oral hearing or fails to submit 
documentary evidence as required for a paper hearing, the employee will 
have waived the right to a hearing, and salary offset may be initiated. 
Further, the employee will have been deemed to admit the existence and 
amount of the Commerce debt as described in the notice of intent to 
offset. If the Commerce entity representative fails to appear at an 
oral hearing, the hearing official shall proceed with the hearing as 
scheduled, and make his or her determination based upon the oral 
testimony presented and the documentary evidence submitted by both 
parties.
    (8) Burden of proof. Commerce entities will have the initial burden 
to prove the existence and amount of the Commerce debt. Thereafter, if 
the employee disputes the existence or amount of the Commerce debt, the 
employee must prove by a preponderance of the evidence that no such 
Commerce debt exists or that the amount of the Commerce debt is 
incorrect. In addition, the employee may present evidence that the 
proposed terms of the repayment schedule are unlawful, would cause a 
financial hardship to the employee, or that collection of the Commerce 
debt may not be pursued due to operation of law.
    (9) Record. The hearing official shall maintain a summary record of 
any hearing provided by this Part. Witnesses will testify under oath or 
affirmation in oral hearings. See 31 CFR 901.3(a)(7).
    (10) Date of decision. The hearing official shall issue a written 
opinion stating his or her decision, based upon documentary evidence 
and information developed at the hearing, as soon as practicable after 
the hearing, but not later than 60 days after the date on which the 
request for hearing was received by the Commerce entity. If the 
employee requests a delay in the proceedings, the deadline for the 
decision may be postponed by the number of days by which the hearing

[[Page 18877]]

was postponed. When a decision is not timely rendered, the Commerce 
entity shall waive interest and penalties applied to the Commerce debt 
for the period beginning with the date the decision is due and ending 
on the date the decision is issued.
    (11) Content of decision. The written decision shall include:
    (i) A statement of the facts presented to support the origin, 
nature, and amount of the Commerce debt;
    (ii) The hearing official's findings, analysis, and conclusions; 
and
    (iii) The terms of any repayment schedules, if applicable.
    (12) Final agency action. The hearing official's decision shall be 
final.
    (f) Waiver not precluded. Nothing in this Part precludes an 
employee from requesting waiver of an overpayment under 5 U.S.C. 5584 
or 8346(b), 10 U.S.C. 2774, 32 U.S.C. 716, or other statutory 
authority. Commerce entities may grant such waivers when it would be 
against equity and good conscience or not in the United States' best 
interest to collect such Commerce debts, in accordance with those 
authorities, 5 CFR 550.1102(b)(2), and Commerce policies and 
procedures. See Department of Commerce Credit and Debt Management 
Operating Standards and Procedures Handbook (currently at http://www.osec.doc.gov/ofm/credit/cover.htm).
    (g) Salary offset process--(1) Determination of disposable pay. The 
Deputy Chief Financial Officer will consult with the appropriate 
Commerce entity payroll office to determine the amount of a Commerce 
Department employee's disposable pay (as defined in Sec.  19.1 of this 
Part) and will implement salary offset when requested to do so by a 
Commerce entity, as described in paragraph (c) of this section, or 
another agency, as described in Sec.  19.20 of this Part. If the debtor 
is not employed by the Commerce Department, the agency employing the 
debtor will determine the amount of the employee's disposable pay and 
will implement salary offset upon request.
    (2) When salary offset begins. Deductions shall begin within three 
official pay periods following receipt of the creditor agency's request 
for offset.
    (3) Amount of salary offset. The amount to be offset from each 
salary payment will be up to 15 percent of a debtor's disposable pay, 
as follows:
    (i) If the amount of the Commerce debt is equal to or less than 15 
percent of the disposable pay, such Commerce debt generally will be 
collected in one lump sum payment;
    (ii) Installment deductions will be made over a period of no 
greater than the anticipated period of employment. An installment 
deduction will not exceed 15 percent of the disposable pay from which 
the deduction is made unless the employee has agreed in writing to the 
deduction of a greater amount or the creditor agency has determined 
that smaller deductions are appropriate based on the employee's ability 
to pay.
    (4) Final salary payment. After the employee has separated either 
voluntarily or involuntarily from the payment agency, the payment 
agency may make a lump sum deduction exceeding 15 percent of disposable 
pay from any final salary or other payments pursuant to 31 U.S.C. 3716 
in order to satisfy a Commerce debt.
    (h) Payment agency's responsibilities. (1) As required by 5 CFR 
550.1109, if the employee separates from the payment agency from which 
a Commerce entity has requested salary offset, the payment agency must 
certify the total amount of its collection and notify the Commerce 
entity and the employee of the amounts collected. If the payment agency 
is aware that the employee is entitled to payments from the Civil 
Service Retirement Fund and Disability Fund, the Federal Employee 
Retirement System, or other similar payments, it must provide written 
notification to the payment agency responsible for making such payments 
that the debtor owes a Commerce debt, the amount of the Commerce debt, 
and that the Commerce entity has complied with the provisions of this 
section. Commerce entities must submit a properly certified claim to 
the new payment agency before the collection can be made.
    (2) If the employee is already separated from employment and all 
payments due from his or her former payment agency have been made, 
Commerce entities may request that money due and payable to the 
employee from the Civil Service Retirement Fund and Disability Fund, 
the Federal Employee Retirement System, or other similar funds, be 
administratively offset to collect the Commerce debt. Generally, 
Commerce entities will collect such monies through the Treasury Offset 
Program as described in Sec.  19.9(c) of this Part.
    (3) When an employee transfers to another agency, Commerce entities 
should resume collection with the employee's new payment agency in 
order to continue salary offset.


Sec.  19.13  How will Commerce entities use administrative wage 
garnishment to collect a Commerce debt from a debtor's wages?

    (a) Commerce entities are authorized to collect Commerce debts from 
an individual debtor's wages by means of administrative wage 
garnishment in accordance with the requirements of 31 U.S.C. 3720D and 
31 CFR 285.11. This Part adopts and incorporates all of the provisions 
of 31 CFR 285.11 concerning administrative wage garnishment, including 
the hearing procedures described in 31 CFR 285.11(f). Commerce entities 
may use administrative wage garnishment to collect a delinquent 
Commerce debt unless the debtor is making timely payments under an 
agreement to pay the Commerce debt in installments (see Sec.  19.6 of 
this Part). At least thirty (30) days prior to initiating an 
administrative wage garnishment, Commerce entities will send notice to 
the debtor in accordance with the requirements of Sec.  19.4 of this 
Part, including the requirements of Sec.  19.4(a)(10) of this Part. For 
Commerce debts referred to the Financial Management Service under Sec.  
19.9 of this Part, Commerce entities may authorize the Financial 
Management Service to send a notice informing the debtor that 
administrative wage garnishment will be initiated and how the debtor 
may request a hearing as described in Sec.  19.4(a)(10) of this Part. 
If a debtor makes a timely request for a hearing, administrative wage 
garnishment will not begin until a hearing is held and a decision is 
sent to the debtor. See 31 CFR 285.11(f)(4). Even if a debtor's hearing 
request is not timely, Commerce entities may suspend collection by 
administrative wage garnishment in accordance with the provisions of 31 
CFR 285.11(f)(5). All travel expenses incurred by the debtor in 
connection with an in-person hearing will be borne by the debtor.
    (b) This section does not apply to Federal salary offset, the 
process by which Commerce entities collect Commerce debts from the 
salaries of Federal employees (see Sec.  19.12 of this Part).


Sec.  19.14  How will Commerce entities report Commerce debts to credit 
bureaus?

    Commerce entities shall report delinquent Commerce debts to credit 
bureaus in accordance with the provisions of 31 U.S.C. 3711(e), 31 CFR 
901.4, and the Office of Management and Budget Circular A-129, 
``Policies for Federal Credit Programs and Non-tax Receivables.'' For 
additional information, see Financial Management Service's ``Guide to 
the Federal Credit Bureau Program,'' which currently may

[[Page 18878]]

be found at http://www.fms.treas.gov/debt. At least sixty (60) days 
prior to reporting a delinquent Commerce debt to a consumer reporting 
agency, Commerce entities will send notice to the debtor in accordance 
with the requirements of Sec.  19.4 of this Part. Commerce entities may 
authorize the Financial Management Service to report to credit bureaus 
those delinquent Commerce debts that have been transferred to the 
Financial Management Service under Sec.  19.9 of this Part.


Sec.  19.15  How will Commerce entities refer Commerce debts to private 
collection agencies?

    Commerce entities will transfer delinquent Commerce debts to the 
Financial Management Service to obtain debt collection services 
provided by private collection agencies. See Sec.  19.9 of this Part.


Sec.  19.16  When will Commerce entities refer Commerce debts to the 
Department of Justice?

    (a) Compromise or suspension or termination of collection activity. 
Commerce entities shall refer Commerce debts having a principal balance 
over $100,000, or such higher amount as authorized by the Attorney 
General, to the Department of Justice for approval of any compromise of 
a Commerce debt or suspension or termination of collection activity. 
See Sec.  Sec.  19.7 and 19.8 of this Part; 31 CFR 902.1; 31 CFR 903.1.
    (b) Litigation. Commerce entities shall promptly refer to the 
Department of Justice for litigation delinquent Commerce debts on which 
aggressive collection activity has been taken in accordance with this 
Part and that should not be compromised, and on which collection 
activity should not be suspended or terminated. See 31 CFR part 904. 
Commerce entities may authorize the Financial Management Service to 
refer to the Department of Justice for litigation those delinquent 
Commerce debts that have been transferred to the Financial Management 
Service under Sec.  19.9 of this Part.


Sec.  19.17  Will a debtor who owes a Commerce or other Federal agency 
debt, and persons controlled by or controlling such debtors, be 
ineligible for Federal loan assistance, grants, cooperative agreements, 
or other sources of Federal funds or for Federal licenses, permits or 
privileges?

    (a) Delinquent debtors are ineligible for and barred from obtaining 
Federal loans or loan insurance or guaranties. As required by 31 U.S.C. 
3720B and 31 CFR 901.6, Commerce entities will not extend financial 
assistance in the form of a loan, loan guarantee, or loan insurance to 
any person delinquent on a debt owed to a Federal agency. The Commerce 
Department may issue standards under which the Commerce Department may 
determine that persons controlled by or controlling such delinquent 
debtors are similarly ineligible in accordance with 31 CFR 
285.13(c)(2). This prohibition does not apply to disaster loans. 
Commerce entities may extend credit after the delinquency has been 
resolved. See 31 CFR 285.13. Waivers of ineligibility may be granted by 
the Secretary or designee on a person by person basis in accordance 
with 31 CFR 285.13(g). However, such authority may not be delegated 
below the Deputy Chief Financial Officer.
    (b) A debtor who has a judgment lien against the debtor's property 
for a debt to the United States is not eligible to receive grants, 
loans or funds directly or indirectly from the United States until the 
judgment is paid in full or otherwise satisfied. This prohibition does 
not apply to funds to which the debtor is entitled as beneficiary. The 
Commerce Department may promulgate regulations to allow for waivers of 
this ineligibility. See 28 U.S.C. 3201(e).
    (c) Suspension or revocation of eligibility for licenses, permits, 
or privileges. Unless prohibited by law, Commerce entities with the 
authority to do so under the circumstances should deny, suspend or 
revoke licenses, permits, or other privileges for any inexcusable or 
willful failure of a debtor to pay a debt. The Commerce entity 
responsible for distributing the licenses, permits, or other privileges 
will establish policies and procedures governing suspension and 
revocation for delinquent debtors. If applicable, Commerce entities 
will advise the debtor in the notice required by Sec.  19.4 of this 
Part of the Commerce entities' ability to deny, suspend or revoke 
licenses, permits or privileges. See Sec.  19.4(a)(16) of this Part.
    (d) To the extent that a person delinquent on a Commerce debt is 
not otherwise barred under Sec.  19.17(a)(c) of this Part from becoming 
or remaining a recipient of a Commerce grant or cooperative agreement, 
it is Commerce policy that no award of Federal funds shall be made to a 
Commerce grant or cooperative agreement applicant who has an 
outstanding delinquent Commerce debt until:
    (1) The delinquent Commerce debt is paid in full,
    (2) A negotiated repayment schedule acceptable to Commerce is 
established and at least one payment is received, or
    (3) Other arrangements satisfactory to Commerce are made.


Sec.  19.18  How does a debtor request a special review based on a 
change in circumstances such as catastrophic illness, divorce, death, 
or disability?

    (a) Material change in circumstances. A debtor who owes a Commerce 
debt may, at any time, request a special review by the applicable 
Commerce entity of the amount of any offset, administrative wage 
garnishment, or voluntary payment, based on materially changed 
circumstances beyond the control of the debtor such as, but not limited 
to, catastrophic illness, divorce, death, or disability.
    (b) Inability to pay. For purposes of this section, in determining 
whether an involuntary or voluntary payment would prevent the debtor 
from meeting essential subsistence expenses (e.g., costs incurred for 
food, housing, clothing, transportation, and medical care), the debtor 
shall submit a detailed statement and supporting documents for the 
debtor, his or her spouse, and dependents, indicating:
    (1) Income from all sources;
    (2) Assets;
    (3) Liabilities;
    (4) Number of dependents;
    (5) Expenses for food, housing, clothing, and transportation;
    (6) Medical expenses;
    (7) Exceptional expenses, if any; and
    (8) Any additional materials and information that the Commerce 
entity may request relating to ability or inability to pay the 
amount(s) currently required.
    (c) Alternative payment arrangement. If the debtor requests a 
special review under this section, the debtor shall submit an 
alternative proposed payment schedule and a statement to the Commerce 
entity collecting the Commerce debt, with supporting documents, showing 
why the current offset, garnishment or repayment schedule imposes an 
extreme financial hardship on the debtor. The Commerce entity will 
evaluate the statement and documentation and determine whether the 
current offset, garnishment, or repayment schedule imposes extreme 
financial hardship on the debtor. The Commerce entity shall notify the 
debtor in writing of such determination, including, if appropriate, a 
revised offset, garnishment, or payment schedule. If the special review 
results in a revised offset, garnishment, or repayment schedule, the 
Commerce entity will notify the appropriate Federal agency or other 
persons about the new terms.

[[Page 18879]]

Sec.  19.19  Will Commerce entities issue a refund if money is 
erroneously collected on a Commerce debt?

    Commerce entities shall promptly refund to a debtor any amount 
collected on a Commerce debt when the Commerce debt is waived or 
otherwise found not to be owed to the United States, or as otherwise 
required by law. Refunds under this Part shall not bear interest unless 
required by law.

Subpart C--Procedures for Offset of Commerce Department Payments To 
Collect Debts Owed to Other Federal Agencies


Sec.  19.20  How do other Federal agencies use the offset process to 
collect debts from payments issued by a Commerce entity?

    (a) Offset of Commerce entity payments to collect debts owed to 
other Federal agencies. (1) In most cases, Federal agencies submit 
debts to the Treasury Offset Program to collect delinquent debts from 
payments issued by Commerce entities and other Federal agencies, a 
process known as ``centralized offset.'' When centralized offset is not 
available or appropriate, any Federal agency may ask a Commerce entity 
(when acting as a ``payment agency'') to collect a debt owed to such 
agency by offsetting funds payable to a debtor by the Commerce entity, 
including salary payments issued to Commerce entity employees. This 
section and Sec.  19.21 of this subpart C apply when a Federal agency 
asks a Commerce entity to offset a payment issued by the Commerce 
entity to a person who owes a debt to the United States.
    (2) This subpart C does not apply to Commerce debts. See Sec.  
Sec.  19.10 through 19.12 of this Part for offset procedures applicable 
to Commerce debts.
    (3) This subpart C does not apply to the collection of non-Commerce 
debts through tax refund offset. See 31 CFR 285.2 for tax refund offset 
procedures.
    (b) Administrative offset (including salary offset); certification. 
A Commerce entity will initiate a requested offset only upon receipt of 
written certification from the creditor agency that the debtor owes the 
past-due, legally enforceable debt in the amount stated, and that the 
creditor agency has fully complied with all applicable due process and 
other requirements contained in 31 U.S.C. 3716, 5 U.S.C. 5514, and the 
creditor agency's regulations, as applicable. Offsets will continue 
until the debt is paid in full or otherwise resolved to the 
satisfaction of the creditor agency.
    (c) Where a creditor agency makes requests for offset. Requests for 
offset under this section shall be sent to the Department of Commerce, 
ATTN: Deputy Chief Financial Officer, 1401 Constitution Avenue, NW., 
Room 6827, Washington, DC 20230. The Deputy Chief Financial Officer 
will forward the request to the appropriate Commerce entity for 
processing in accordance with this subpart C.
    (d) Incomplete certification. A Commerce entity will return an 
incomplete debt certification to the creditor agency with notice that 
the creditor agency must comply with paragraph (b) of this section 
before action will be taken to collect a debt from a payment issued by 
a Commerce entity.
    (e) Review. A Commerce entity is not authorized to review the 
merits of the creditor agency's determination with respect to the 
amount or validity of the debt certified by the creditor agency.
    (f) When Commerce entities will not comply with offset request. A 
Commerce entity will comply with the offset request of another agency 
unless the Commerce entity determines that the offset would not be in 
the best interests of the United States, or would otherwise be contrary 
to law.
    (g) Multiple debts. When two or more creditor agencies are seeking 
offsets from payments made to the same person, or when two or more 
debts are owed to a single creditor agency, the Commerce entity that 
has been asked to offset the payments may determine the order in which 
the debts will be collected or whether one or more debts should be 
collected by offset simultaneously.
    (h) Priority of debts owed to Commerce entity. For purposes of this 
section, debts owed to a Commerce entity generally take precedence over 
debts owed to other agencies. The Commerce entity that has been asked 
to offset the payments may determine whether to pay debts owed to other 
agencies before paying a debt owed to a Commerce entity. The Commerce 
entity that has been asked to offset the payments will determine the 
order in which the debts will be collected based on the best interests 
of the United States.


Sec.  19.21  What does a Commerce entity do upon receipt of a request 
to offset the salary of a Commerce entity employee to collect a debt 
owed by the employee to another Federal agency?

    (a) Notice to the Commerce employee. When a Commerce entity 
receives proper certification of a debt owed by one of its employees, 
the Commerce entity will begin deductions from the employee's pay at 
the next officially established pay interval. The Commerce entity will 
send a written notice to the employee indicating that a certified debt 
claim has been received from the creditor agency, the amount of the 
debt claimed to be owed by the creditor agency, the date deductions 
from salary will begin, and the amount of such deductions.
    (b) Amount of deductions from Commerce employee's salary. The 
amount deducted under Sec.  19.20(b) of this Part will be the lesser of 
the amount of the debt certified by the creditor agency or an amount up 
to 15% of the debtor's disposable pay. Deductions shall continue until 
the Commerce entity knows that the debt is paid in full or until 
otherwise instructed by the creditor agency. Alternatively, the amount 
offset may be an amount agreed upon, in writing, by the debtor and the 
creditor agency. See Sec.  19.12(g) (salary offset process).
    (c) When the debtor is no longer employed by the Commerce entity. 
(1) Offset of final and subsequent payments. If a Commerce entity 
employee retires or resigns or if his or her employment ends before 
collection of the debt is complete, the Commerce entity will continue 
to offset, under 31 U.S.C. 3716, up to 100% of an employee's subsequent 
payments until the debt is paid or otherwise resolved. Such payments 
include a debtor's final salary payment, lump-sum leave payment, and 
other payments payable to the debtor by the Commerce entity. See 31 
U.S.C. 3716 and 5 CFR 550.1104(l) and 550.1104(m).
    (2) Notice to the creditor agency. If the employee is separated 
from the Commerce entity before the debt is paid in full, the Commerce 
entity will certify to the creditor agency the total amount of its 
collection. If the Commerce entity is aware that the employee is 
entitled to payments from the Civil Service Retirement and Disability 
Fund, Federal Employee Retirement System, or other similar payments, 
the Commerce entity will provide written notice to the agency making 
such payments that the debtor owes a debt (including the amount) and 
that the provisions of 5 CFR 550.1109 have been fully complied with. 
The creditor agency is responsible for submitting a certified claim to 
the agency responsible for making such payments before collection may 
begin. Generally, creditor agencies will collect such monies through 
the Treasury Offset Program as described in Sec.  19.9(c) of this Part.
    (3) Notice to the debtor. The Commerce entity will provide to the 
debtor a copy of any notices sent to the

[[Page 18880]]

creditor agency under paragraph (c)(2) of this section.
    (d) When the debtor transfers to another Federal agency--(1) Notice 
to the creditor agency. If the debtor transfers to another Federal 
agency before the debt is paid in full, the Commerce entity will notify 
the creditor agency and will certify the total amount of its collection 
on the debt. The Commerce entity will provide a copy of the 
certification to the creditor agency. The creditor agency is 
responsible for submitting a certified claim to the debtor's new 
employing agency before collection may begin.
    (2) Notice to the debtor. The Commerce entity will provide to the 
debtor a copy of any notices and certifications sent to the creditor 
agency under paragraph (d)(1) of this section.
    (e) Request for hearing official. A Commerce entity will provide a 
hearing official upon the creditor agency's request with respect to a 
Commerce entity employee. See 5 CFR 550.1107(a).

PART 21--[REMOVED AND RESERVED]

0
2. Remove and reserve part 21.

PART 22--[REMOVED AND RESERVED]

0
3. Remove and reserve part 22.

    Dated: April 5, 2007.
Lisa Casias,
Deputy Chief Financial Officer and Director for Financial Management, 
Department of Commerce.
[FR Doc. E7-6699 Filed 4-13-07; 8:45 am]
BILLING CODE 3510-FA-P


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